HKSAR v. SHEK KA KIN

CACC 81/2003

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO. 81 OF 2003

(ON APPEAL FROM DCCC 881/2002)

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J U D G M E N T

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Hon Beeson J: (giving the judgment of the Court)

1. The Applicant sought leave to appeal against his conviction following a trial before Deputy Judge Woodcock in the District Court on one count of Conspiracy to Defraud, contrary to Common Law. He was represented by Mr Peter Duncan of counsel on that application. Originally the Applicant represented himself in seeking leave to appeal against his sentence of 3 years and 3 months' imprisonment, but on his advising us at the hearing that he did not wish to pursue that application, we dismissed it.

Background

2. The Applicant was one of 4 Defendants - one pleaded guilty; another died prior to trial and the trial proceeded against the Applicant, who was the 1st Defendant, and the 4th Defendant. The 4th Defendant was acquitted after trial.

3. The fraud was a standard "loco London gold" fraud and followed the common pattern for such operations. A company, Viking Development Hong Kong Ltd (Viking) was incorporated in Nuie Island on 13 July 2000 and registered in Hong Kong as an overseas company on 1 August 2000. Viking leased office premises in Hong Kong from about September 2000.

4. Thereafter Viking advertised for staff, targeting middle-aged women of limited education who, ostensibly, were employed to perform minor office tasks. A fraud of this type is perpetrated by other staff members, who pretend to be achieving high investment yields by trading in gold on their own account. Encouraged by the apparent successes of staff mentors, the fraud target(s) would be enticed into making similar investments. Initial successes, inevitably, would be followed by losses which, the victim(s) were advised, were susceptible of cure only after more cash was invested. Eventually the target in this particular conspiracy realized she had been duped and defrauded of her life's savings. She complained to police.

5. At trial there was no dispute that the fraud had been perpetrated - most of the prosecution evidence was agreed, as was the expert evidence which established the parameters of the fraud.

Prosecution evidence against the Applicant

6. The evidence against the Applicant was as follows:

(1)	He was the sole director of Viking and its authorized representative in Hong Kong.
(2)	The Causeway Bay office was leased by him.
(3)	He opened the HSBC HKD account for Viking and was its sole authorised signatory.
(4)	He was the subscriber of 2 office telephone lines.
(5)	An electricity bill showed the Applicant was the subscriber from 14 August 2000 to 12 September 2000.

7. The prosecution relied on this circumstantial evidence to link the Applicant to the conspiracy, on the basis that the totality of the evidence enabled the judge to draw an irresistible inference that the Applicant was party to the conspiracy.

Applicant's evidence

8. The Applicant gave evidence and did not dispute the operation of the fraud, nor his own formal involvement with Viking. He claimed however to be completely ignorant of the company's operations and the nature of its business. He had agreed to repay a favour, by lending his name to a friend, Ah Keung, for the purpose of opening a bank account and setting up the company, but had not agreed to lend his name to apply for utilities, or the tenancy. Ah Keung dealt with the necessary paper work - all he had done was sign papers when asked to do so. He had no suspicion that he was doing anything illegal and denied playing any part in the conspiracy.

9. The judge having given herself various warnings and directions and, in particular, having borne in mind the Applicant's clear record, convicted him.

Grounds of appeal

10. The Applicant relied on 3 grounds of appeal, which were as follows:

(1)	Given the paucity of the evidence the judge erred in deciding that the prosecution had established the Applicant's guilt to the required standard.
(2)	In a case where there was a danger the court might believe that lying went to proof of guilt, the judge failed to direct herself that;
	(a) lies could never prove guilt in themselves; and
	(b) a person might lie for reasons other than guilt.
(3)	There was a material irregularity in the course of the trial, in that the prosecution introduced, via cross-examination, evidence apparently probative of the Applicant's guilt, without having adduced the same before the close of the prosecution case.
(4)	The accumulated grounds rendered the conviction unsafe and unsatisfactory.

Ground 1

11. The circumstantial evidence linking the Applicant to the conspiracy was powerful. If accepted it established that he was the sole support of the infra-structure of the fraud. This type of fraud to be successful requires a convincing business framework - plush, if not resplendent offices; a company structure that can withstand a Registry search, if necessary; a front man without a criminal record - such as this Applicant. All these attributes foster the illusion of bona fide corporate existence, an illusion necessary to encourage novice traders.

12. The Applicant did not take part in the day-to-day running of the business, but his role complemented those played by others who worked closely with the target(s). His was a necessary, albeit differing, role. The judge knew that any conclusions she drew from the circumstantial evidence had to be compelling and expressed herself to be so satisfied.

13. She considered and rejected the evidence of the Applicant about Ah Keung's role - indeed it is difficult to see how she could do otherwise. There was not only the inherent improbability of Ah Keung's tying up his own business venture in a manner that ensured only the Applicant could operate it, but the obvious risks inherent in the company bank account being operable only by the Applicant. The judge was entitled to disbelieve his evidence.

14. There is no merit in this ground of appeal.

Ground 2

15. The judge failed, allegedly, to direct herself adequately, or at all, on lies which, it was submitted, the prosecution relied on and which the judge, accepting that reliance, had found to be probative of the Applicant's guilt.

16. Mr Duncan referred us to 3 passages in the judge's Reasons for Verdict on which he relied to support his argument:

""Despite the 1st Defendant's clear record, I find there to be no other inference, when one considers the effect of all the pieces of evidence collectively, other than a compelling inference. I find the inference compelling and the only one that no reasonable man could fail to draw from the direct facts proved. These are the words of Lord Diplock in R v Kwan Ping-bong (1979). I bore in mind these words and found there to be an irrefutable inference; the 1st Defendant was part of this conspiracy. The 1st Defendant is convicted as charged." (B42D)

"I considered all the links set out in this case connecting the 1st Defendant to Viking Limited. The prosecution say that all these links are sufficient to prove an irrefutable inference that he is a co-conspirator. The prosecution submits that his explanation of his involvement is incredible and not believable and that it affects his credibility, thereby going further to provide the irrefutable inference of guilt." (B40S)

"I did reread the 1st Defendant's evidence and after careful consideration, did find it hard to believe. Courts have seen defendants assist others in opening bank accounts or limited companies without any knowledge of any illegal activity. Drug addicts do it often for monetary reward. In these circumstances, guilt or innocence often depend entirely on the credibility of the explanation given."" (B41C) (emphasis supplied by the Applicant's counsel.)

17. Counsel submitted the judge had drawn an irresistible inference of guilt from the circumstantial evidence but, in addition, relied on lies told by the Applicant in his evidence as proof of his guilt. In relying on lies told by the Applicant, the judge was looking at the evidence in the same way the prosecution had presented its case and had failed to direct herself fully on lies.

18. Mr Duncan referred to HKSAR v Mo Shiu Shing [1999] 1 HKC 43 which sets out the principles governing the effect of, and the manner in which, lies should be treated by a court and HKSAR v Choi Gin Ngon and Others [1998] 1 HKLRD 902 which considers what a District Court judge was required to incorporate in his or her Reasons for Verdict and what directions it would be assumed as having been given, even if not specifically stated. Further guidance on the need to guard against the risk of improper use by the jury of an accused's lies is given in Yuen Kwai Choi v HKSAR [2003] 2 HKC.

19. We are unable to agree with Mr Duncan that the judge relied on lies as proof of guilt - in our view her comments as recorded in the Reasons for Verdict were confined to the Applicant's general credibility. She knew that any inferences which might be drawn from the circumstantial evidence had to be irresistible before reliance could be placed on them. It was entirely possible that having heard the Applicant's evidence about how and why he became involved she could have formed a doubt as to his guilt, or been satisfied that his association with the company was innocent.

20. What the Judge is saying in the comments adverted to, is that his explanation about his involvement cannot be believed, not that she is relying on his lies as proof of his guilt. Her reference to re-reading the Applicant's evidence and finding it hard to believe, confirms that is her stance.

21. This was not a case where a full Lucas direction was called for - nor was it necessary for the judge, as sole arbiter of the facts, to direct herself expressly on lies as counsel has suggested. The tenor of her comments shows that what concerned her was an issue of credibility. As a professional tribunal and in the absence of cogent indications to the contrary, the judge could not have been misled into thinking that mere disbelief of the Applicant's evidence went to proof of his guilt.

Ground 3

22. The "material irregularity" complained of was the prosecutor's reliance, in cross-examination, on material purporting to confirm that in 1999 the Applicant had been a director of another company, which, as customer agreements recovered from Viking's computer showed, was also dealing in "loco London gold". That company was one with which the Applicant was said to have had no other involvement or knowledge, except as appeared from formal company documents. Evidence of that nature would make it difficult for the Applicant to present himself as an innocent dupe of Ah Keung, in relation to his connection to Viking.

23. It was not clear why the material had not been disclosed to the defence, or put in as unused material. The prosecution stance was that the document was not intended to be probative of guilt, but was to be used in cross-examination to destroy the Applicant's credibility.

24. It appears, as best we can deduce in the absence of a trial transcript, that the defence objected to the use of the document - and that the judge excluded it. The judge, of necessity, had been made privy to the contents of the document, so she had to rule on its use. Apparently there was no application for the judge to discharge herself in consequence of seeing the material. After counsel for the Applicant had addressed the judge as to how she should treat the material, the judge said:

"All I pay heed to is that he was a director of another limited company set up in 1999 or thereabouts and in this company he had no involvement or knowledge. That is all I considered and as the defence said in final submissions, I should consider no more or no less." (B40Q)

25. The judge, rightly, considered prosecuting counsel's submission that the document would go to credit only, as disingenuous, because the practical effect of producing it would not only affect the Applicant's credibility but also be probative of guilt. She directed herself to ignore the prejudicial effect of knowing the Applicant was a director of another named company, as no such evidence was ever adduced. Thereafter in line with defence counsel's submission on how she should treat the material, she took into account only that the Applicant was a director of another limited company in 1999, and had no involvement in or knowledge of that company.

26. It is an important principle of practice which requires the prosecution to adduce all the material it intends to rely on before the prosecution case closes: R v Rice [1963] 1 Q B 857.

27. R v Halford 67 Cr. App. R 318 CA established that cross-examination is permitted on unused material which goes to credit only. If such material, in addition, is undisclosed a separate issue may arise as to whether a court might intervene to prevent its being used. It is possible that if there is a good reason for the non-disclosure of the material the court will permit cross-examination of a Defendant as to his credit on material that is both unused and undisclosed. Here the judge correctly decided that the particular material went beyond providing a test of the Defendant's credit but went to proof of the general issue.

28. The judge, in our view, dealt with the problem correctly. She decided that the material should be excluded. She ignored any possible prejudice to the Applicant which might have arisen from any irregular use of the material. In making that judgment she took into account only the remaining part of the cross-examination which was unexceptional and which was not objected to by defence counsel. She strictly limited the facts she took from the material, which had been forced to her attention.

29. Having regard to what occurred however we propose to grant leave, but treating the hearing as the appeal, the appeal is dismissed.